The property renovation industry in Australia is a $3.6 billion industry. That is mainly due to the advent of all of the television shows about what is happening in the market, like Ground Force, Location, Location, The Block, and even Burke’s Backyard. All of those sorts of programs have created an interest in the renovation market.
Renovating is probably the easiest place for most people to start when they are looking for growth. It is something anyone can do. Or is it! It is something some people don’t want to do because they don’t want to get their hands dirty. But anyone can do it! Or can they!
You have got to be committed to it. There are going to be pointed in time when you are going to doubt if you have done the right thing, but TRUWAY can help work through it and make the journey easier. I know it can be difficult, particularly if it is not your thing, but seriously, money can be made very quickly, very easily in this market. It’s secure, it’s safe – you have got to live somewhere, so why not try and create some equity out of just your normal existence.
Property renovating can also be a form of manufacturing growth. It is a smart investor who then utilizes this equity to buy additional moneymaking properties. Passive Income. There are many books written on the process of renovating. However, the main theme of the message is: Do not over capitalise!
To ensure that you don’t over-capitalise, do your feasibility study. TRUWAY can assist you in this process.
The first thing that TRUWAY would do is go out and sit down on the other side of the road on the curb and look at the property and think about what you can do to manufacture growth.
TRUWAY’s team will go through that property, room by room to work out what it is precisely that can be done in each room. Is it a new carpet, is it a paint job, do you have to put built-ins in if it is a bedroom? Can you rearrange any of the rooms? Can you put in polished timber floors? Does it need a new kitchen? Does it need a new bathroom? What does it need? Does it need more light? TRUWAY will go through it systematically and determine what the action plan is for each of those rooms. Determine what can be done to the outside. What is going to happen to the landscaping? Does anything need to be done to the fencing? TRUWAY will list all the items out. TRUWAY has spreadsheets that capture the scope of works and calculate the cost, TRUWAY also a pre-qualified list of trades to ensure the best cost-effective result is achieved so that you gain the maximum growth in the property ensuring not to over capitalise. Giving you the freedom of knowing that an experienced professional is on your side.
TRUWAY team will determine, in the current economic climate, if this place was renovated – to the extent of the scope of works agreed to been done with you – what would it be worth? You must ensure that we don’t configure in any growth or any market movement – what would it be worth in today’s market? TRUWAY has as part of our team also has a registered property values, we will look at the market value with the improvements on the property, placing a figure on the scope of works and decide what it is going to cost you would be to develop the property to that stage, and then work out what your profit is going to be. If you agree with TRUWAY’s recommendation for the scope of works, you need to ask yourself if you are prepared to do that work for that budget. It might take three months to complete the work or it might be two week’s work depending on the agreed scope of works. Can you manage the holding cost and the cost of the renovation with TRUWAY’s project management cost included in the renovation estimate? Whatever it is, how much profit are you demanding for that amount of work? There is no point in doing all of this work and giving somebody else this great renovated property if you did not make any money on it.
With TRUWAY’s method, you will ensure that you don’t over capitalise on your property renovation.
Be wary if you are a beginner renovator, that you don’t go out there and buy something that really should be a scrapper where you just bulldoze the thing and rebuild it.
There are many techniques that can be utilised in a cost-effective manner to improve the appearance and therefore value of a property.
With the advent of numerous home improvement programs on television, everybody wants to be a renovator. There are some investors who try and fail miserably, leaving behind a disaster to be put back on the market and usually incurring financial losses.
Other investors pay too much for their renovations and subsequently try and re-sell properties at a greater than market value price, only to be disappointed when the market forces dictate the price.
Some investors are exceptionally good at renovating. They know exactly how much expense a property can bear, and are able to either resell the property at a gain or revalue and refinance and hold as an equity bank.
TRUWAY has a number of clients who apply this strategy and who consistently make substantial gains in the property renovation market in Newcastle and Port Stephens.
A few are divorced older female clients who use this strategy to earn a living. Two, in particular, earn an exceptionally good living by implementing this strategy and they love it.
As an estimate on average, investors can turn over three or four and sometimes five properties a year at anything from a $20,000-$100,000 gain.
The trick to doing this successfully is time and money. Time is money, the secret is being able to have the projects so well planned that they work like clockwork,
What to look out for in a renovation deal
There are logistical steps in doing a renovation. You have got to do your cost-benefit analysis. If you are going to spend money on a property, you are going to make sure that you are getting the benefit from that money being spent, even if it is an existing property and it might need a bit of a paint job. A paint job is going to cost you ‘X amount of dollars – how much more rent is you going to get if you spend that ‘X amount of dollars. How much more is that property going to be worth if you spend that money? If the figures don’t pan out, don’t do it.
If you have got a property that is comfortable being rented, and it is not the ideal property, maybe you could do a small property renovation to manufacture an increase in growth creating equity, it s that improvement that will allow you to increase the rental and or with the equity that you have created may allow you to go and do something else with another investment.
When deciding whether to purchase a property suitable for renovation, I have found the best thing to do is spend some time looking at the property and studying exactly what renovations need to be done and what renovations could be done.
More time spent in the planning process can save thousands of dollars in unnecessary renovation costs. The primary focus for an investor renovator can be divided into two main categories;
Although having said that, increasing the value of the property is also important for revaluing purposes in order to facilitate equity access for re-investment.
The list below is an example of renovation, as a professional I believe is vitally important being the categories that are the worst and best return on your money when renovating to manufacture growth for equity and increase rental returns.
Worst Returns of Investment
Best Returns on Investment
So if you are interested and want to become an investor, TRUWAY and our team can assist you and prevent you from the pitfalls of renovating, and as Real Estate Buyer’s Agent, Property Velures, and Licenced Building Project Managers we are experienced in strategies to manufacture growth, equity and rental return for your investment.